The Swiss government should not return assets stolen from the people of Uzbekistan to its government until the Swiss government reviews its return policies in light of reported irregularities in the use of assets Switzerland previously returned to the Kazakh government

We, the undersigned representatives of civil society organizations advocating for transparent and responsible repatriation of assets stolen from the Uzbek people, are urgently calling upon the Swiss government to ensure that any decision regarding the ill-gotten assets of Gulnara Karimova, currently the subject of litigation in several countries, be made with due consideration to the rights and development prospects of the Uzbek people.

We urge the Swiss government not to act hastily and to consider that the promise of reform by the Mirziyoev regime have not yet materialized in practice. Based on all available information we strongly believe that return of these assets without sound conditionalities developed in consultation with major stakeholders, including civil society - which has been in a stranglehold in Uzbekistan for more than two decades - would only further perpetuate corrupt practices in Uzbekistan, leaving the systemic causes of the original criminal conduct untouched. The Swiss government can and should use these assets as an incentive to promote and support the course of reforms in Uzbekistan in the long-term interests of the Uzbek people.

The government of Uzbekistan’s claim over these assets is based on a decision of Tashkent Regional Criminal Court. As far as we know, Swiss law bars the recognition of a foreign court judgment if the procedural principles set forth in the European Convention for the Protection of Human Rights and Fundamental Freedoms were not observed. Given the absence of anything approaching a due process in Uzbek courts, as numerous reports by human rights organizations, international bodies, and other governments have documented, we question how the Swiss government could consider returning assets in reliance on this basis. The only way we see it could comply with its legal obligations would through a return with sound conditionalities.

Hastily returning the assets also raises the risk of repeating the irregularities observed around the Swiss government’s recent, essentially unconditional return of $48 million in money laundering proceeds to the Kazakh government. The assets were returned through funding two projects administered by the World Bank Trust Fund. We have reports that that those projects are affected by conflict of interests and opaque disposal of funds to organizations controlled by top officials, including Dariga Nazarbayeva, the daughter of Kazakh President Nursultan Nazarbayev.

The controversial restitution of $48M to Kazakhstan and the looming return of Gulnara Karimova’s ill-gotten assets directly to the Uzbek government contravenes the Swiss Federal Department of Foreign Affairs’ (SFDFA) commitments to pursue transparent and accountable repatriation of the proceeds of corruption, stolen assets frozen and confiscated on Swiss territory.

In our view, asset return should be considered as an integral part of the global fight against corruption. The repatriation policy that appears to have been functionally adopted by the Swiss government is contradictory to this view. Violation of commitments against corruption and regarding responsible asset return may undermine Switzerland’s reputation as a leading state in asset return.

Not just the Kazakh case, but also earlier lessons learned by the Swiss government in the Montesinos case, the Abacha case and the Angola case - where setbacks occurred as well - underline the importance of responsible repatriation and the responsibilities of the requested state in this process. As the Swiss government acknowledges in its recent publication No Dirty Money, “with the right mechanisms it is possible to seek transparency and justice in restitution of plundered assets. Cooperation with the country of origin, political will, and close monitoring offer the best guarantees that the funds will be used to benefit the people and not be misappropriated once again.” We urge the Swiss government not to lose sight of this fine statement of policy when considering the return of assets to Uzbekistan.

In one of its statements the Swiss government outlined its reasoning for not setting up a Bota Foundation type solution: "Restitution through a foundation proved to be administratively cumbersome". We are very disappointed that for the SFDFA considerations of justice and restitution of the victims of corruption were outweighed by a desire to be rid of the assets as soon as possible with as little of administrative burden as possible.

We call upon the Swiss government:

•to take a firm and responsible approach to asset restitution by setting certain conditions that would guarantee that the funds returned were not again stolen but go instead to further the well-being of the Uzbek people. Any arrangement for the return of Uzbek assets should work to encourage the government of Uzbekistan to maintain its commitments for reforms and take serious, measurable steps towards establishing effective anti-corruption mechanisms and the rule of law. These reforms should proceed rather than follow any asset return, as all too often reforms are promised, but never delivered.

•to launch an investigation into the alleged irregularities in the implementation of projects funded out of the $48M restituted to Kazakhstan in 2015.

•to postpone the decision on repatriation of Uzbek assets until this investigation is complete. The result of this investigation may have implications for Swiss policy on the modality of restitution. Swiss authorities should recognize that Uzbekistan still lags far behind even Kazakhstan in transparency and accountability standards, and in the ability of watchdog organizations to operate, so the risk of even more irregularities in the use of returned assets in Uzbekistan is greater should the Swiss federal government decide to return assets without appropriate safeguards attached.

•to make its commitment to fighting grand corruption the first priority in its policy on asset return to Uzbekistan and to contribute more attention, time, and resources to ensure the proceeds of corruption are returned responsibly, in the long-term development interests of the Uzbek people.

KEY INFORMATION:

Uzbek assets:

In 2012, the Public Prosecutor’s Office in Switzerland launched a criminal investigation into the origins of assets on the bank accounts of Takilant, LTD, Swisdorn, LTD and other shell companies the beneficial owner of which was Gulnara Karimova, the daughter of the former Uzbek president Islam Karimov. The Prosecutor’s Office froze assets valued at 800 million Swiss francs held in accounts in Switzerland and elsewhere and filed criminal charges against several close associates of Gulnara Karimova on the suspicion of money laundering. The aforementioned amount of 800 million CHF was a bribe paid to Gulnara Karimova by telecom companies in exchange for promoting their businesses in Uzbekistan. The investigation by the Swiss prosecutor’s office led to the collapse of Karimova’s once-expansive financial empire, criminal convictions for her closest associates, ostracism, and a criminal investigation for Karimova herself leading to her imprisonment in 2017. Karimova’s trial proceeded in violation of all international standards, with no right provided for Karimova to choose her defense, with no public transparency, and was in fact staged in the kitchen of her own house. It is our understanding that SFDFA is planning to return the assets to the government of Uzbekistan very soon, despite all concerns raised earlier by civil society groups regarding such a scenario.

Kazakh assets:

The recent return of $48 million to the government of Kazakhstan is a second tranche related to the scandal known as “Kazakhgate“. The first tranche of $115 million was repatriated in 2008 through the charitable Bota Foundation that was administered by a board accountable to its three founding countries, Kazakhstan, Switzerland and the United States, as well as the World Bank. The experience of Bota Foundation was widely praised as a model for responsible return of stolen assets that met standards of transparency and accountability and provided mechanisms for secure checks and balances in disposal of funds in interests of Kazakh people.

The recently returned second tranche of $48 million stands in total opposition to the Bota Foundation model in terms of transparency and accountability. It evolves from a 2011 corruption prosecution in Geneva, relating to a currently unknown Kazakh figure. Parties to the case agreed that the money would be returned to Kazakh government. Switzerland decided to use the World Bank Trust Fund as a means to return these assets to Kazakhstan and monitor its use. The Agreement was signed by the Swiss Agency for Development and Cooperation (SDC) and the World Bank on 20 December 2012. Out of this amount, $21.76 million has been apportioned to the so-called Youth Corp Program, with the agreement for this project signed in 2015 between the World Bank and the Kazakh Ministry of Education and Science as the implementing agency. The second part, in the amount of $23.06 million, was allocated in the same year for an energy efficiency project to be implemented by the Ministry of Investments and Development.

According to our information at least one of these two projects, the Youth Corp Program, is accompanied by a number of irregularities which may be described as money laundering.

To begin with, the World Bank did not disclose to the Kazakh public that the money for both projects originates from the assets frozen and confiscated by Swiss authorities in the money laundering case committed by a Kazakh citizen, most likely by a top official and his associates. Instead, the bank presented this grant as having been allocated by the Swiss Agency for Development and Cooperation (SADC). Thus, the Kazakh society was misled on the origin of the funds. It was not money allocated out of the Swiss public finance, but, in fact, was the repatriation of assets stolen from the Kazakh people and retuned through the very same public office that might itself have been instrumental in the original criminal conduct.

Secondly, there have been a number of transactions possibly made with conflicts of interest. Here are only few examples:

•Aliya Bizhanova, who has acted on behalf of the World Bank as Operations Officer responsible for the Youth Corp Project, is reportedly herself a co-founder of the Kazakh Society of Researchers in the Field of Education. This non-profit had received a grant from the World Bank’s Youth Corp project (grant No 140840014775). It turns out that Bizhanova acted in this case in two capacities, representing two parties, the one allocating funds and another receiving these funds. Furthermore, the head of this non-profit is Aida Sagintayeva who is, in turn, a niece of Bakhytjan Sagintayev, the current Prime Minister of Kazakhstan. Aliya Bizhanova is reportedly also a co-founder or ultimate owner of other NGOs that received grants out of the Youth Corp project.

•The Coordinating Agency, which is responsible for distributing 92% of the funds of the Youth Corps project, is a quasi-government consortium made up of three organizations. It is led by the Congress of Kazakhstan Youth whose chair is the eldest daughter of the President, Dariga Nazarbayeva. There is a likelihood that Dariga Nazarbayeva may have influence over the Coordinating Agency due to her position in the Congress of Kazakhstan Youth and could therefore have influence over the distribution of funds. As a result, the project might have been politically instrumentalized – resulting in propagandistic rhetoric in youth policy documents published by government centres on how to mold a new generation of patriotic Kazakhs prepared to do their utmost for the motherland. Thus, the SADC may have found itself an unwitting co-funder of a scope of a ‘Komsomol-style’ organization.

•There is also information that some organizations that received grants out of the Youth Corp project are not legitimate entities and do not exist at addresses where they have been registered.

There are similar problems with how the World Bank is administering funds allocated by the Swiss government to Kazakhstan, but it would be better if the Swiss authorities had themselves acquired better understanding of how the funds they have allocated to the Kazakh government are being used in reality.